Member States' tax provisions are to be scrutinised to ensure that they do not discriminate against mobile EU citizens, in a targeted initiative launched by the Commission. The focus is on both economically active individuals such as workers and self-employed, and those that are not, such as retired persons. The initiative complements and completes a previous project which looked at the tax treatment of cross-border workers (IP/12/340).

Worker mobility has been identified both as one of the key potentials for increasing growth and employment in Europe. For the EU-15, GDP is estimated to have increased by almost 1% in the long term as a result of post-enlargement mobility (2004-2009)1.

However, tax obstacles remain one of the key deterrents to EU citizens leaving their State of origin to look for work in another Member State. Tax obstacles may arise either in the State of origin or in the new State of residence.

This is why, throughout 2014, the Commission will carry out a thorough assessment of Member States' tax regimes to determine whether they create disadvantages for mobile EU citizens. If discrimination or breaches of the EU's fundamental freedoms are found, the Commission will flag them to the national authorities and insist that the necessary amendments are made. Should the problems persist, the Commission may initiate infringement procedures against the Member States in question.

Algirdas Šemeta, Commissioner for Taxation, Customs, Anti-Fraud and Audit, said: "EU rules are clear: all EU citizens must be treated equally within the Single Market. There cannot be discrimination, and workers' right to free movement must not be impaired. It is our duty to citizens to ensure that these principles are reflected in practice in all Member States' tax rules."

As tax obstacles remain one of the key deterrents to cross border mobility, the Commission is working on many fronts to tear down barriers for EU citizens, for example in its proposal to tackle double taxation (IP/11/1337), to improve the application of workers' rights to free movement (IP/13/372, MEMO/13/384), or to boost protection for posted workers (IP/13/1230, MEMO/13/1103).

Background

The Commission's initiative will scrutinise and assess whether EU citizens residing in a Member State other than their own are penalised and taxed more heavily as a result of their mobility. This could either be in the Member State of origin, or that where they have chosen to move. Citizens may suffer tax disadvantages:

because of the location of their investments or assets, the location of the taxpayer himself or due to the mere change of the taxpayer's residence;

in respect of their contributions to pensions schemes, receipt of pensions or transfers of pension and life insurance capital;

in respect of their self-employed activities carried-out in another State or due to the mere relocation of such activities;

because of the refusal of certain tax deductions or tax benefits;

in respect of their accumulated wealth.

With this in mind, the Commission will look at the situation of many different categories of EU citizens: workers, the self-employed and also pensioners.

The right to live and work anywhere in the EU is both a fundamental right for European citizens and a key instrument for developing a Europe-wide job market. The Commission is working with Member States to facilitate the free movement of workers (e.g. Commission's proposal to modernise EURES, the pan European job search network IP/14/26, MEMO/14/22, MEMO/14/23) but also ensures that workers and EU citizens residing in States other than their own are not treated differently from nationals of the host State and that they enjoy the same tax advantages as national workers